Maine Township condo association sues insurance company after fatal 2018 fire

Dec. 6--A suburban condominium association is suing a major insurance company after a fatal fire destroyed much of a 35-unit building in Maine Township last year.

In a lawsuit filed last month in Cook County Circuit Court, the Landings Condo Association, Building J, alleges that Farmers Insurance Group failed to provide adequate insurance coverage for its 9396 Landings Lane building, which caught fire on Sept. 16, 2018, killing one resident and leaving dozens more homeless.

According to the lawsuit, the six-story building, located near Park Ridge, was under-insured for years, resulting in a payout from Farmers that is $2.68 million short of what is needed to restore the gutted structure.

The lawsuit seeks $2.68 million, plus attorney's fees, court costs and damages incurred by condo unit owners.

Attorney Julia Smolka, who is representing the Landings association in the lawsuit, said the Illinois Condominium Property Act requires insurance companies to provide the full replacement cost of a condo building, which the lawsuit alleges did not occur in this case.

"They were in a position to know what the replacement cost would be," Smolka said of Farmers, adding that the individual condo owners were not insurance experts and were "relying on Farmers to write a policy properly."

According to the lawsuit, 9396 Landings Lane was insured for $5.9 million in 2018, but its actual replacement cost exceeds $8.5 million.

After the fire, Farmers increased the building's coverage limit to $8.4 million -- $2.5 million higher than the previous coverage limit, the lawsuit says. This increase, according to the lawsuit, is evidence that the property was under-insured by the insurance carrier previously.

Luis Sahagun, a spokesperson for Farmers Insurance Group, said the company would not comment on litigation matters.

The fire that heavily damaged 9396 Landings Lane broke out around 7:45 a.m., Sept. 16, 2018, in a corner unit on the sixth floor, fire officials said.

Hilda Edelman, 85, a resident of another sixth floor unit, died in the fire. She was found in the sixth-floor hallway, according to a report from the Illinois State Fire Marshal.

Due to the extensive damage that occurred, the cause of the blaze has remained undetermined, the fire marshal's report said.

A portion of the building's roof collapsed and the remainder of the building sustained heavy water damage as firefighters worked throughout the day to extinguish the fire, said Howard Silver of Property Corporation of America, the management company overseeing the Landings complex.

"Basically, the whole building had to be scooped out," Silver said. "It's now a big, open area. The only thing you see is an elevator shaft and stairways."

While much of the brick exterior will remain, the inside will need to be completely rebuilt, according to current building codes, which now require sprinkler systems in residential buildings, Silver said. The condo association plans to present each condo unit owner with a rebuilt "shell" of their former residence, he said. Owners will be responsible for remodeling and covering that cost, he indicated.

The building has sat empty for more than a year, though construction work recently began, Silver said. Without the $2.68 million payment from Farmers, the association representing the building will need to obtain a mortgage to cover the cost of the rebuild, the lawsuit says.

The building was not always under-insured, attorneys for the Landings maintain.

Prior to 2015, 9396 Landings Lane had been insured by Allstate Insurance and, at that time, the policy had a coverage limit of $7.3 million,according to the lawsuit.

By 2017, the coverage limit under Farmers was $6.1 million, which the local Farmers agent then lowered to $5.9 million "to further reduce the premium," the lawsuit alleges.

When asked if the decrease in the amount of coverage raised any concerns for the management association that oversees the Landings complex, Smolka said the assumption was that the coverage was correct because, based on Illinois law, the insurance company could not sell a policy unless it provided full replacement coverage.

It was not until after the fire that the true cost to rebuild was revealed, Smolka said.

Also named as a defendant in the lawsuit is Katarzyna Piatek, a Des Plaines-based Farmers Insurance agent that the Landings says sold the policy and set the coverage limit.

Piatek said neither she, nor her agency, would be commenting on the lawsuit.

The lawsuit alleges that Piatek purposely lowered the coverage limit far below the building's replacement value in order to sell the policy to the 9396 Landings Lane Board and lower the premiums paid by the association.

Each of the 15 condominium buildings in the Landings is individually insured and each has an association and board that approves their building's insurance policy, Silver said.

In the case of 9396 Landings Lane, the former president of the board signed off on the policy "without consulting the board," Silver said.

That individual is not named as a defendant in the lawsuit.

According to the Illinois State Fire Marshal's report, the 2018 fire originated inside unit 605 in a bedroom that had been converted from a dining room. Fire patterns indicated the fire may have started where the bed had been located, but the exact point of origin could not be determined due to the extensive fire damage, according to the report.

An occupant of the unit told detectives that he awoke to find a fire on the floor at the foot of his bed, but did not know exactly what was on fire, the fire marshal's report says. According to the report, he was able to escape the unit with his girlfriend, mother and grandmother.

The report states that the condo unit where the fire started was being rented. The Landings requires units to be owner-occupied and rentals are prohibited, Silver said, denying that the family living in the unit were tenants of the owner.

When residents may begin moving back into their condo units is still unknown.

"My heart goes out to these people," Silver said. "They've been displaced for a year-and-change already, and they are still several months away from returning. It's obviously something that's disrupted their lives permanently. It's a sad situation."

jjohnson@chicagotribune.com

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